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Monday, March 13, 2006Tug-Of-War Continues
The epic battle between the bears and the bulls rages on!
Look at the daily chart below of the Russell 2000 index (equivalent ETF is symbol IWM; index symbol is $RUT). Actually, $RUT is a pretty good symbol for this, since that's what the market seems stuck in......in any case, take note of the resistance line at the top, and the numerous times the prices have bounced away from resistance. Also take note of the most recent price action (boxed in green) where the prices seem to violate the resistance, implying a push above and beyond these levels.
http://photos1.blogger.com/blogger/4311/970/400/0313-RUTDaily.jpg
This is where the battle is being waged, because the bulls are trying to push prices clearly above resistance whereas the bears are trying to push it below. What's fascinating to me is that, even on a much finer granularity of time (minutes versus days) you can see this tug-of-war being played out. Note well the trendline, still shown here, and how prices seem to get shoved above and below it in spurts. Most interesting to me today is how prices were once again pushed beneath the resistance line after an early, quick run-up to try to break through.
http://photos1.blogger.com/blogger/4311/970/400/0313-RUTIntraday.jpg
What this has all boiled down to, on a daily basis, is another exquisite shooting star candlestick formation. I remain frustrated that the market doesn't move downward in earnest, but instead is in this vexing state of equilibrium. Everyone - bulls and bears alike - is looking for a trend. The endless waiting will make the eventual break (in either direction) that much more dramatic.
http://photos1.blogger.com/blogger/4311/970/400/0313-RUTCandle.jpg
at 3/13/2006 4 insightful comments
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Friday, March 10, 2006Happy Sixth Anniversary!
It was six years ago today that the NASDAQ Composite peaked. Here's a percentage graph of what's happened since then. Cheers, everyone!
http://photos1.blogger.com/blogger/4311/970/400/0310-SixYears.jpg
at 3/10/2006 2 insightful comments
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In the same post, I apologized for my not-so-hot recommendations to short Hansen Natural (HANS). When I originally recommended this as a short, the stock was about $101. They posted great earnings after the close yesterday, and it opened this morning at $107, blowing out the position.
What's interesting, though, is that the stock actually ended up down for the day, as shown in the graph below. Indeed, this is a big, fat bearish engulfing pattern on gigantic volume.
http://photos1.blogger.com/blogger/4311/970/400/0309-HANS.jpg
So perhaps I was too hasty with my apology! But the fact is that when the stock opened at $107 this morning, that was the time to get out. There was no way to tell the stock would end up down or end up at $130. Once a stop is violated, you get out, and you get out at once. It's heartening to see I didn't screw up this analysis as badly as I feared, but I stick by my "always have a stop" rule.
I'll add one more thing to this assertion - the QQQQ is closer than ever to breaking below its head and shoulders pattern, as you can see below. If the QQQQ breaks below 40.16, I predict a rapid 9% decline in the NASDAQ 100. This prediction is invalidated if the QQQQ crosses above 42.01.
http://photos1.blogger.com/blogger/4311/970/400/0309-QQQQ.jpg
Now, let's turn our attention to that debate I mentioned!
So I'm sure the fundmental analysis when the stock was $100 told a great story. But the trend ended, and the chart would have told you that. Buying puts on this sucker would have netted you hundreds of percent in gains. Such is the power of technical analysis.
http://photos1.blogger.com/blogger/4311/970/400/0309-BMHC.2.jpg
Good luck, everyone. Keep those comments coming!
at 3/09/2006 11 insightful comments
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Thursday, March 09, 2006HANS Earnings & $UTIL Breakdown
First off, looks like I blew the HANS short recommendation. This company came out with stellar earnings this morning, and pre-market bidding looks like it'll open at a new lifetime high. Ah, well; can't win 'em all, folks. The key is that we had a stop in place, we take the loss, and we move on. With a stock like this, it's hard to know if it'll ever stop rising!
In retrospect, the problem with my analysis on HANS was the lack of analysis. This chart was not in any particular technical formation per se. I made the worst of errors of charting - projecting what I thought might happen based on a very small set of supporting data (in this instance, what looked like a double top). So, again, this was not a real pattern at all (such as a wedge or a saucer). So I'm disappointed in myself in being so hasty; that was a lousy analysis and a lousy recommendation.
Let's look at something which does have a good pattern and is probably more important to the market in general - the Dow Utilities. As you can see from the graph below, there are two very bearish situations with this chart. First, the very large ascending trendline going back over three years was broken a number of weeks ago. Second, there is a very plain head & shoulders pattern which I've highlighted here for you. So we've got a bit of a one-two punch.
http://photos1.blogger.com/blogger/4311/970/400/0309-UTIL.0.jpg
The likely subsequent drop in this market would portend even higher interest rates as well as additional weakness in the market overall.
at 3/09/2006 12 insightful comments
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Tuesday, March 07, 2006Give Yourself a HANS
This one's out of gas, folks.
Up 5,500% over the past few years. I'd short it here with a stop at $104.80
http://photos1.blogger.com/blogger/4311/970/400/0307-HANS.jpg
at 3/07/2006 4 insightful comments
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Tuesday, March 07, 2006QQQQ Judgment Day
A short and sweet intraday post here.
It's simple - QQQQ is nearing both a major support trendline as well as a potential break in a head & shoulders formation.
If the QQQQ breaks below 40.50, it's time to party, bears.
http://photos1.blogger.com/blogger/4311/970/400/0307-QQQQ.jpg
While I have your attention, check out the massive H&S on symbol MTH (mentioned weeks ago here).
at 3/07/2006 1 insightful comments
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Monday, March 06, 2006Da Bears
I've got to start off today's blog (posted to you from overcast Las Vegas, Nevada) with a salute to the clown who wrote, "Wow, if this short recommendation is as good as your AAPL, NTRI, and OIH short recommendations then I am in for a treat." This nimrod (anonymous, of course) was scoffing at my suggestion to short ADSK.
What tickles me is that all FOUR of those recommendations (ADSK, AAPL, NTRI, OIH) have been just stellar. The puts on them are up big-time. So - - there's yer treat, pal.
Anyhoo - - obviously today was another dandy day for the bears. Instead of harping on that, let me do something a bit unusual and point out two fine looking bullish charts in this environment.
One of them, TradeStation, has had a marvelous breakout on just amazing volume. This is absolutely what you want to see - strong, higher prices on soaring volume. It's particularly impressive considering the very weak environment of late:
http://photos1.blogger.com/blogger/4311/970/400/0306-TRAD.jpg
The other is one I've cited numerous times, and I'm sorry, this is just such a gorgeous chart I need to share it again. Qwest - symbol Q - is just a beautiful inverted head & shoulders with, once again, good solid volume behind the rise.
http://photos1.blogger.com/blogger/4311/970/400/0306-Q.jpg
As for the market's modest fall.......there's not a heck of a lot I can add. My positions are pretty much identical to what I've cited already, and they're all doing terrific. I have no idea if this will finally be the beginning of "the big one" (although I'm kind of weary of waiting!)
But Friday's shooting star pattern, couple with today's follow-through weakness (which took out some recent support levels among the indices) can only be perceived as encouraging for those who believe the market is going to fall in a very meaningful way this year.
And, in a nod to the Oscars, I'll close by saying.......Good Night, and Good Luck.
at 3/06/2006 1 insightful comments
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Friday, March 03, 2006That's The Way (Uh-Huh, Uh-Huh)
Well, well, well. Quite a day, eh, kids?
The bulls had control until 1:55 p.m. EST when the Dow was up about 80 points. At that point, the market starteed falling, and all the indexes I follow ended the day down.
This is a really powerful reversal day, exhibiting "shooting star" candlestick patterns on many charts.
Here, for example, is the Russell 2000 ETF (symbol IWM). Just look at the size of that star! (If you don't know the term, you can read about it here). As always, click the image to see a much bigger version.
http://photos1.blogger.com/blogger/4311/970/400/0302-IWMStar.jpg
Looking at the longer-term trend, below is a daily graph of the S&P 500. Notice the ascending trendline. The price has pushed up against this resistance level several times over the past year or so. My view is that the index is going to start pulling away (and down) from this resistance. The S&P crossing above $1,300 would negate this view, at least in the short term.
http://photos1.blogger.com/blogger/4311/970/400/0302-SPXWaning.jpg
at 3/03/2006 5 insightful comments
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Wednesday, March 01, 2006Another Swipe at ADSK
Here's a nice, clean trade for you.
ADSK collapsed through its long term ascending trendline last November. Now, nearly four months later, it's retraced to the upper resistance of its descending channel.
Shorting this - or buying puts - with a stop above $42.25 seems like a good trade to me.
http://photos1.blogger.com/blogger/4311/970/400/0301-ADSK.jpg
at 3/01/2006 3 insightful comments
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Tuesday, February 28, 2006$18 Billion in 8 Minutes
I've been watching the stock market a very long time - something like 25 years - but I don't think I've ever seen something like what happened to Google (GOOG) this morning.
The stock was cruising along, up a few bucks, even in the face of a somewhat soft market. Then George Reyes, the company's CFO, made some remarks at a conference that growth at the Internet giant was slowing. The stock instantly collapsed, and $18 billion in market cap was wiped away in the span of just eight minutes. As you can see in the graph below, it's recovered a portion of these losses since then (how is THIS for volatility, folks?)
http://photos1.blogger.com/blogger/4311/970/400/0228-GOOGPlunge.jpg
What's quite interesting about this fall is that it stayed tightly bounded by the (cue spooky music) Fibonacci retracement levels. The recovery of GOOG over the past couple of weeks didn't push past its former retracement (not by much, at least), and when this atom bomb was dropped on the stock this morning, it didn't fall below the Fib resistance level beneath.
http://photos1.blogger.com/blogger/4311/970/400/0228-GOOG.jpg
Cool stuff!
at 2/28/2006 6 insightful comments
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Friday, February 24, 2006Some Bearish Picks
If you ever want to see a great contrarian indicator, check out the SUPER HUGE font MarketWatch used to trumpet the new highs earlier this week. Wow! Got a feeling these guys enjoy "up" days? And a saucy headline, no less......
http://photos1.blogger.com/blogger/4311/970/400/Bullsy-060222.jpg
Anyway, a bunch of folks have written to ask me to post some specific bearish recommendations. Since the market is getting mushy again (Can this blasted market please just make up its mind, one way or the other? Please???) I'd be happy to offer some up........
First is Arch Coal (ACI), a huge gainer last year. It's gapped down recently, and this makes for a nice clean stop price...
http://photos1.blogger.com/blogger/4311/970/400/0224-ACI.0.jpg
Mail order apparel company Coldwater Creek (CWTR) is losing momentum and represents a low-risk short opportunity:
http://photos1.blogger.com/blogger/4311/970/400/0224-CWTR.0.jpg
Federated Stores (FD) has broken though an important trendline, and as you can see, it looks like the broad trend has turned downward.
http://photos1.blogger.com/blogger/4311/970/400/0224-FD.0.jpg
Perpetual favorite Google (GOOG) has recovered partly from its large fall over the past several weeks and again represents a great high-point short opportunity (or, for those comfortable with the risk, puts)....
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Perpetual favorite Google (GOOG) has recovered partly from its large fall over the past several weeks and again represents a great high-point short opportunity (or, for those comfortable with the risk, puts)....
http://photos1.blogger.com/blogger/4311/970/400/0224-GOOG.0.jpg
I also like Harrah's which, although it's well above the ascending trendline, seems also to be losing momentum.
http://photos1.blogger.com/blogger/4311/970/400/0224-HET.0.jpg
Lastly, the oil services sector, discussed several times here, has shaped up in a very nice short opportunity. As I've mentioned, there is an active options market on OIH if you're seeking potential multi-hundred percent gains.
http://photos1.blogger.com/blogger/4311/970/400/0224-OIH.0.jpg
Best of luck to you!
at 2/24/2006 10 insightful comments
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Wednesday, February 22, 2006Market Strength Continues
The market pushed higher today, with the DIA hitting an unprecedented high price. (The reason that the underlying index, the Dow 30, wasn't at an all-time high was because the DIA takes into account dividends). Want a fun fact? If you bought the Dow 30 on July 6, 1999 {nearly seven years ago} and held it to today, the net change in the index would have been 0! Incredible, considering what's happened during the past six years, isn't it?
I've mentioned symbol ASYT before, but I've got to again state what a picture-perfect inverted head & shoulders this was. Just take a look - particularly on the pullback (highlighted here with an arrow) and the subsequent boost in volume. It's up about 100% since the breakout.
http://photos1.blogger.com/blogger/4311/970/400/0222-ASYT.jpg
Although my view on the market remains bearish still, for you bulls out there, here are a few symbols which look very attractive to buy: Q, RADN, SCMR, TLAB, TRAD.
at 2/22/2006 8 insightful comments
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Tuesday, February 21, 2006Time to Short OIH?
The oil services index (symbol OIH) is looking very enticing as a short.
Even though crude oil, and correspondingly OIH, have shot higher in the past few sessions, I am sensing the long-term uptrend (lasting years, to date) may be broken.
If you take a look at this intraday graph, you will see a triumvirate of reasons converging on why about $145 looks like resistance for OIH. First, there's the Fib retracement. Second, there's the neckline on the head & shoulders formation. And third, there's the descending trendline.
http://photos1.blogger.com/blogger/4311/970/400/0221-OIH.jpg
Options on this are heavily traded, so the bid/ask spread isn't murder. I'd get very serious about buying puts on this anywhere near $145 (with that price level as a stop-loss contingent order, if you want to play it safe).
at 2/21/2006 5 insightful comments
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Friday, February 17, 2006
Time to Short Apple?
Apple Computer (AAPL) looks like a pretty good short right now (or, if you're open to it, buying puts). I'd suggest a stop of 71.02 on this one.
http://photos1.blogger.com/blogger/4311/970/400/0217-AAPL.jpg
at 2/17/2006 23 insightful comments
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Thursday, February 16, 2006Google's Upswing
A couple of days ago, I mentioned Google (GOOG) might be a good short term buy (yes, buy - I'm not JUST a bear, you know!) It's climbed something like 30 points or so since then.
http://photos1.blogger.com/blogger/4311/970/400/0216-GOOG.0.jpg
I don't expect this to be a new trend as it makes its way to $2,000. Indeed, I'd short it as it approaches its retracement level of $394. It was kind of weird seeing GOOG staying so static over a few days. Now it's back to its old volatile self.
at 2/16/2006 8 insightful comments
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Wednesday, February 15, 2006Oil Spill
Well, here's a trade I blew big time!
Over the past several weeks, I had taken various short positions on oil, particularly oil service stocks. One of my favorite trades was buying puts in the OIH ETF. It's liquid and able to move large amounts.
Almost all these trades were profitable, but I figured that, short term, the move had played itself out. I based this on examing the Fibonacci retracements for OIH, and it seemed that the price was getting right onto resistance:
http://photos1.blogger.com/blogger/4311/970/400/0214-oih.jpg
Unfortunately, my temporarily bullish stance on oil was blown out of the water as crude oil fell below its supporting trendline. The graph below shows the continuous contract for crude oil over the past several years, and although this graph doesn't shows today's price bar, the price did drop substantially below the supporting trendline.
http://photos1.blogger.com/blogger/4311/970/400/0215-Crude.jpg
Besides OIH falling, many high-flying oil service stocks (like HP, shown below) have taken quite a dive (highlighted here in green).
http://photos1.blogger.com/blogger/4311/970/400/0215-HP.jpg
Since OIH is below its Fib retracement level, it's entirely likely it'll continue falling to the next level below. At this point, I'd steer clear being long anything to do with oil.
at 2/15/2006 3 insightful comments
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Tuesday, February 14, 2006Bye-Bye, DIA
Well, the price of the DIA has blown above its resistance level, meaning the entire diamond pattern is invalid for the bears.
Indeed, the diamond pattern is a two-edged sword. So just as it is a strong harbinger of lower prices if violated to the downside, it likewise speaks to higher prices when violated on the upside. The psychologically important 11,000 on the Dow is being challenged again as well.
http://photos1.blogger.com/blogger/4311/970/400/0214-DIABYE.jpg
As a side note, I'd also mention GOOG might be a short-term buy at this point, with a stop at 341.88. It's fallen almost $140, and it's received a ton of widely distributed bad press lately, so for now a lot of the selling may have been wrung out of the stock.
at 2/14/2006 12 insightful comments
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Monday, February 13, 2006Watch That Line!
The DIA got extremely close to violating its descending resistance line (that is, the upper-right line of the diamond pattern). But the key thing is that this lined repelled the DIA and the market fell today (not much, but it fell nonetheless).
http://photos1.blogger.com/blogger/4311/970/400/0213-DIA.0.jpg
As long as the DIA can stay below this line, the chances of it breaking beneath its diamond pattern (and thus creating a true downdraft in the market) remain intact. I'd put a conservative stop price of 109.50 here.
at 2/13/2006 2 insightful comments
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DIAmonds are a Bear's Best Friend
The $INDU (and therefore the DIA) is in a rare diamond pattern right now. Regardez vous:
http://photos1.blogger.com/blogger/4311/970/400/0209-DIAmond.jpg
This is simple, folks. If the Dow breaks below 10,750, it's party time for the bears. Just watch.
at 2/09/2006 6 insightful comments
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